ACC 560 Week 4 Assignment
E5-2 Kozy Enterprises is considering manufacturing a new product. It projects the cost of direct materials and rent for a range of output as shown below.
Output in Units Rent Expense Direct Materials
1,000 $5,000 $4,000
2,000 5,000 6,000
3,000 5,000 7,800
4,000 7,000 8,000
5,000 7,000 10,000
6,000 7,000 12,000
7,000 7,000 14,000
8,000 7,000 16,000
9,000 7,000 18,000
10,000 10,000 23,000
11,000 10,000 28,000
12,000 10,000 36,000
Instructions
(a) Diagram the behavior of each cost for output ranging from 1,000 to 12,000 units.
(b) Determine the relevant range of activity for this product.
(c) Calculate the variable cost per unit within the relevant range.
(d) Indicate the fixed cost within the relevant range.
Click here for the solution: Kozy Enterprises is considering manufacturing a new product
